Airfreight forwarding

Outline
I. Introduction to airfreight forwarding
1. Introduction
2. Infrastructures
II. International Air Cargo Operations
1. International Associations
2. Legal Issues
3. Documentation
4. Rates and Charges
5. Extend of carriers liability
6. Claims and actions
III. Air Cargo Operations in Vietnam

I. Introduction to airfreight
forwarding
1.1. Advantages

1.2. Disadvantages

- High speed
- Quick service
- Easy Access
- No physical barrier
- Natural Route
- National Defense

- Risky
- Very costly
- Small Carrying
Capacity
- Huge Investment

I. Introduction to airfreight
forwarding
2. Infrastructure
2.1. Airport: an airfield equipped with control tower
and hangers as well as accommodations for
passengers and cargo
2.2. Aircraft: a vehicle that can fly
- Passenger aircraft
- All cargo aircraft
- Combined aircraft
2.3. Loading/ Unloading Equipments

II. International Air Cargo

Operations
1.
International Associations
1.1. International Civil Aviation Organization (ICAO)
ICAOs objective are to:
Ensure the safety and orderly growth of worldwide civil aviation;
Enhance the arts of aircraft design and its operations, for peaceful
purposes;
Encourage the development of airways, airport and air navigation
facilities;
Cater to the needs of passengers and operators for safe,
frequent, efficient and economical air transport;
Ensure that the rights of countries are fully respected to avoid
discrimination, allowing every country equal opportunities to
operate international airlines;
Eliminate unfair competition and practices; and
Promote flight safely and further developments in international
civil aviation.

1. International Associations
1.2. International Air Transport Association (IATA)
Some of IATAs interest, in relation to its members,
are:
- Safety and security;
- Industry viability and recognition;
- Products and services;
- Standards and procedures; and
- Industry support

1. International Associations
1.3. International Federation of Freight Forwarders Associations
(FIATA)
FIATAs objectives are to:
- Unite the freight forwarding industry around the world
- Represent, promote and protect the interest of the freight forwarding
industry by acting as advisor or expert in dealings with international
transport companies;
- Familiarize people with the services of freight forwarders through
the dissemination of information and distribution of publications;
- Introduce measures to enhance the quality of service rendered by
freight forwarding companies, by developing and promoting uniform
forwarding documentation, standard trading conditions and so on;
and
- Improve the speed and efficiency of freight transportation by
providing industrial or vocational training for the employees of freight
forwarders, solving liability insurance problems, and distributing ecommerce information tools like barcodes, radio frequency scanners
and electric data interchange software.

1. International Associations
1.4. ASEAN Federation of Forwarders Associations (AFFA)
AFFAs objectives are to:
- Unify all freight forwarders in the ASEAN region through
national forwarders associations;
- Foster, promote, develop and maintain close cooperation
between and among freight forwarders in ASEAN;
- Represent members in their collective interests in
relation to freight forwarding matters peculiar to the
ASEAN region; and
- Pursue all measures to improve the quality, standard and
professionalism of freight forwarders in the ASEAN
region.

2. Legal Issues
- Convention for the unification of certain rules
relating to international carriage by air, 1929/
Warsaw Convention
- Protocols to amend the convention for the certain
rules relating to international carriage by air:
-

The Hague Protocol 1955

Guadalajara Convention 1961
Montreal Agreement 1966
Guatemala Protocol 1971
Montreal Protocol 1975 No 1, 2, 3, 4

3. Documents
3.1. Air Way Bill (AWB)
3.1.1. Air Waybill (AWB) or air consignment note
refers to a receipt issued by an international
carrier company for goods and an evidence of
the contract of carriage.
- AWB is not a document of title to the goods.
Hence, it is non-negotiable.
- AWB is always a received for shipment
document.

3.1. Air Way Bill (AWB)

3.1.2. Different types
Base on issuer:
Air line airway bill
Neutral airway bill

Base on consolidation services

House airway bill
Master airway bill

3.1. Air Way Bill (AWB)

3.1.3. Functions
Evidence of the contract of affreightment
Confirmation of shipment
Freight Bill
Insurance Certificate
Custom declaration
The guide to the air staffs

3.1. Air Way Bill (AWB)

3.1.4. Contents of AWB
First side:

AWB number
Name and address of the issuer
Airport of departure
References to originals
References to conditions of contract
Shipper
Consignee
Charge Code
Issuing carriers agent

3.1. Air Way Bill (AWB)

First side:

Accounting information
Currency
Routing
Declared value for carriage
Declared value for customs
Insurance Amount
Handling information
Other fees and charges
Number of Pieces

3.1. Air Way Bill (AWB)

Second side (only in 3 originals):
Information about carriers liabilities
Terms and condition of contract of carriage

3.1. Air Way Bill (AWB)

3.1.5. Allocation
Original 1: for carrier, signing by shipper
Original 2: for consignee, signing by shipper and
issuing carrier
Original 3: for shipper, signing by issuing carrier
No 4: for final destination
No 5: for final airport
No 6, 7, 8: for the 3rd, 2nd and 1st carrier
No 9: for carriers agent

3.2. Other documents

-

Commercial invoice
Packing list
Cargo manifest
Shippers letter of instruction
Certificate of quality, quantity, live animals,
dangerous goods
- Custom declarations

4. Freight and Charges

4.1. Freight rate: the rate declared in air freight tariff on the
AWB issuing day.
4.2. Basis for calculation
- Quantity
- Volume/ measurement
- Value
Total freight = freight rate X number of units
Freight in Air transport is regulated in the unified freight
tariff of IATA:
TACT rules (The Air Cargo Tariff): rules to calculate freight
TACT freight rate:
Freight rate for North American area
Freight rate for other areas

4. Freight and Charges

4.3. Different types
- General Cargo Rate (GCR): the normal rate applied for
normal general cargo carried between two airport.
- GCR- N (normal): for goods with quantity < 45kg
- GCR- Q (quantity) for goods with quantity 45kg (45kg, 45-100,
100-250, 250- 500, 500- 1000, >1000)

- Minimum rate: the rate to guarantee profit for airlines

- Special Commodity rate (SCR): the rate applied for
special commodities in a certain routes.
- Class Rate/ Commodity Box Rate (CBR): freight rate
classified by commodity (live animals: 150% GCR, high
value commodities: 200% GCR, books, journals,
magazines, luggage, mortal remains/ ashes: 50% GCR)

4. Freight and Charges

4.3. Different types
- Freight All Kinds (FAK): single freight that is charged irrespective of
the commodity
- ULD rate: the rate that is charged when the goods are consolidated
in unit load devices
- Delayed shipment charge
- Fast shipment charge: the rate applied for cargo sending within 3
hours
- Unified Cargo rate: single freight that is charges irrespective of the
section
- Group rate: the rate that is applied for forwarders or airlines agents,
who usually send goods in containers, pallets or other transport
articles
- Subscribed rate: the rate that is charged when charter an entire
aircraft to carry the goods

5. Extend of carriers liability to the

goods
5.1. Warsaw Coventions
Period of liability
The carrier is liable for damage sustained in the event
of the destruction or loss of, or of damage to, or of the
delay in the carriage, to any goods, if the occurrence
which caused the damage so sustained took place
during the carriage by air.
The carriage by air comprises the period during which
the goods are in charge of the carrier, whether in an
aerodrome or on board an aircraft, or in the case of a
landing outside an aerodrome, in any places
whatsoever.
=> from airport to airport

5. Extend of carriers liability to the

goods
5.1. Warsaw Conventions
Basic of liability:
Loss, damage, and delay in carriage
Exceptions:
the carrier is not liable if he proves that he and his agents
have taken all necessary measures to avoid the damage or
that was impossible for him or them to take such measures
In the carriage of goods the carrier is not liable if he proves
that the damage was occasioned by negligent pilotage or
negligence in the handling of the aircraft or in navigation and
that, in all other respect, he and his agents have taken all
necessary measures to avoid the damage.

5. Extend of carriers liability to the

goods
5.1. Warsaw Conventions
* Limitation of liability
Passengers: 125,000 francs
Registered luggage or goods: 250
francs/kg
Private luggage: 5,000 francs
Franc unit consisting of 65.5 milligrams
gold of millesimal fineness 900

5. Extend of carriers liability to the

goods
5.2. Hague protocol 1955
- Deleting the second exception for the
carrier
- Adding one more exception: inherent vice,
latent vice, or natural nature of goods
- Increasing the limits of liability to
passenger to 250,000 francs

5. Extend of carriers liability to the

goods
5.3. Guadalajara Convention
- Contracting carrier: means a person who as a principal
makes an agreement for carriage governed by the
Warsaw Convention with a passenger or shipper or with
a person acting on behalf of the passenger or shipper
- Actual carrier: means a person other than the contracting
carrier, who, by virtue of authority from the contracting
carrier, performs the whole or part of the carriage
contemplated in paragraph (b) but who is not with
respect to such part a successive carrier within the
meaning of the Warsaw Convention. Such authority is
presumed in the absence of proof to the contrary.

5. Extend of carriers liability to the

goods
5.4. Guatemala Protocol 1971
- In the case of loss, damage or delay of
part of the cargo, or of any object
contained therein, the weight to be taken
into consideration in determining the
amount to which the carrier's liability is
limited shall be only the total weight of the
package or packages concerned.

5. Extend of carriers liability to the

goods
5.5. Montreal protocol 1975- No. 1, 2, 3, 4
- No. 1 & No. 2:
- Registered luggage and goods: 17 SDR or 250 francs/kg
- Private luggage: 332 SDR or 5000 francs

- No 3:
- Registered luggage and goods: 17 SDR or 250 francs/kg
- Private luggage: 1000 SDR or 15,000 francs
- Exceptions:
- Damages caused by latent vice, inherent vice, or natural nature of
goods
- Defects of wrapping not caused by carrier or his agents
- War or armed conflict
- Actions of government regarding import- export or transit
procedures

6.Claims and Actions

6.1. Claims
Limitation of claims:
Warsaw Convention:
Loss, damages: within 7 days from the day of receiving the
goods
Delay: within 14 days from the day of receiving the goods or the
goods should have been at the disposal of consignee.

Hague Protocol:
Loss, damages: within 14 days from the day of receiving the
goods
Delay: within 21 days from the day of receiving the goods or the
goods should have been at the disposal of consignee.

6.Claims and Actions

6.1. Claims
Claims documents:
- Application
- AWB
- Cargo documents
- Documents of damages
- Report on compensations (consisting of
indemnity and other fees and charges)

6.Claims and Actions

6.2. Actions
- Claimer: cargo owner
- Defendant:
- 1st carrier
- Last carrier
- segmental carrier (damages of goods happened in his
stage)

- Limitation of actions: 2 years from the time

airplane has arrived/should has been arrived
destination point or transportation process has
been stopped.

III. Air Cargo Operations in Vietnam

1. Air transportation organizations in
Vietnam
-

Vietnam Airlines
Pacific Airlines
VASCO (Vietnam Air Service Company)
SFC (Service Flight Corporation of Vietnam)

2. Legal Issues
Civil Air Law 1991
Civil Air Law 2006
Regulations of international air cargo
operations 1993

3. Extend of carriers liability to the

goods
3.1. Period of liability: from airport to airport
3.2. Basis of liability: losses, damages,
delays in delivery
Exceptions:
Inherent vice, latent vice
Coercive actions of governments
Wars, armed conflicts
Fault of shippers, consignees, escorts

3.3. Limitation of liability: 17SDR/kg

4. Claims and actions

4.1. Limitations of claims
- Shortage, damage of goods: 14 days from the
day of receiving goods
- Loss: 21 days from the day goods should have
been delivered
- Delays: 21 days from the day goods should have
been delivered
4.2. Limitations of actions: 1 years from the time
airplane has arrived/should has been arrived
destination point or transportation process has
been stopped.